![]() If so, the financial statements describe the basis used. If such an intention or need exists, the financial statements may have to be prepared on a different basis. Hence, it is assumed that the entity has neither the intention nor the need to enter liquidation or to cease trading. Going concernĭefinition: ‘ Financial statements are normally prepared on the assumption that the reporting entity is a going concern and will continue in operation for the foreseeable future. In each case, where a formal definition is provided by the Conceptual Framework for Financial Reporting (the Conceptual Framework), that definition is given, followed by an elaboration of the key points of that definition that candidates need to understand. This article relates solely to the ‘principles of accounting’ and, therefore, we will consider the following principles from the study guide:Įach of these principles is considered below. What candidates need to know about each of these is: It is important for candidates to ensure that attention is directed to each of the individual items listed on the study guide. It is important to note that the ‘principles of accounting’ are distinct from the ‘qualitative accounting characteristics’ and this differentiation between principles and characteristics is clearly set out in the Detailed Study Guide (‘the study guide’). These difficulties may arise because the outcome is more theoretical in nature than the majority of the syllabus and also tends to be examined in narrative style questions. ![]() This outcome seems to cause difficulties for some candidates. One of the outcomes of the FA2 syllabus is to ‘Explain generally accepted accounting principles and concepts’. An introduction to professional insights.Virtual classroom support for learning partners. ![]()
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